Wis. Admin. Code Department of Revenue Tax 2.32

Current through September 30, 2024

Section Tax 2.32 - Economic development surcharge - gross receipts defined

(1) PURPOSE. This section defines "gross receipts" for purposes of the economic development surcharge under subch. VII of ch. 77, Stats.

Note: For taxable years beginning before January 1, 2013, an economic development surcharge is imposed on:

(a) individuals, estates, trusts, statutory employees and partnerships that have at least $4,000,000 in gross receipts from a trade or business for the taxable year;

(b) corporations and insurers that have at least $4,000,000 in gross receipts from all activities for the taxable year; and

(c) individuals, estates, trusts and partnerships engaged in farming that have at least $4,000,000 in gross receipts from farming for the taxable year. For taxable years beginning on or after January 1, 2013, an economic development surcharge is only imposed on corporations and insurers that have at least $4,000,000 in gross receipts from all activities for the taxable year.

(2) Definitions. In subch. VII of ch. 77, Stats., and this section:

(a) "Gross receipts from all activities of corporations" means the sum of the following items reportable by corporations other than those listed in pars. (c) and (d):

1. Gross receipts or sales reportable on federal Form 1120, U. S. corporation income tax return.

2. Gross dividends reportable on federal Form 1120.

3. Gross interest income reportable on federal Form 1120.

4. Gross rents reportable on federal Form 1120.

5. Gross royalties reportable on federal Form 1120.

6. The gross sales price from the disposition of capital assets and business assets includable in computing the net gain or loss on federal Form 1120.

7. Gross receipts passed through from other entities, and all other receipts that are included in gross income for Wisconsin franchise or income tax purposes.

(b) "Gross receipts from all activities of exempt organizations taxable as corporations" means the sum of the following items reportable by those entities:

1. Gross receipts or sales reportable on federal Form 990-T, exempt organization business income tax return.

2. The gross sales price from the disposition of capital assets and business assets includable in computing the gain or loss on federal Form 990-T.

3. Gross rents includable in computing rent income on federal Form 990-T.

4. Gross income from unrelated debt-financed property includable in computing unrelated debt-financed income on federal Form 990-T.

5. Gross interest, annuities, royalties and rents from controlled organizations includable in computing those items of income on federal Form 990-T.

6. Gross investment income includable in computing investment income on federal Form 990-T.

7. Gross exploited exempt activity income includable in computing that item of income on federal Form 990-T.

8. Gross advertising income includable in computing advertising income on federal Form 990-T.

9. Gross receipts passed through from other entities, and all other receipts that are included in gross income for Wisconsin franchise or income tax purposes.

(c) "Gross receipts from all activities of insurance companies" means the sum of the following items reportable by insurance companies:

1. Gross premiums earned reportable on Schedule A on federal Form 1120-PC, U. S. property and casualty insurance company income tax return.

2. Gross dividends reportable on Schedule A, or Schedule B if applicable, of federal Form 1120-PC.

3. Gross interest income reportable on Schedule A, or Schedule B if applicable, of federal Form 1120-PC.

4. Gross rents reportable on Schedule A, or Schedule B if applicable, of federal Form 1120-PC.

5. Gross royalties reportable on Schedule A, or Schedule B if applicable, of federal Form 1120-PC.

6. The gross sales price from the disposition of capital assets and business assets includable in computing the gain or loss on Schedule A, or Schedule B if applicable, of federal Form 1120-PC.

7. Gross receipts passed through from other entities, and all other receipts that are included in gross income for Wisconsin franchise or income tax purposes.

(d) "Gross receipts from all activities of tax-option (S) corporations" means the sum of the following items reportable by S corporations:

1. Gross receipts or sales reportable on federal Form 1120S, U. S. corporation income tax return for an S corporation.

2. Gross rents includable in computing the income from real estate and other rental activities reportable on Schedule K of federal Form 1120S.

3. Gross interest income reportable on Schedule K of federal Form 1120S.

4. Ordinary dividends reportable on Schedule K of federal Form 1120S.

5. Gross royalties includable in computing royalty income reportable on Schedule K of federal Form 1120S.

6. The gross sales price from the disposition of capital assets and business assets includable in computing the gain or loss on federal Form 1120S and Schedule K of federal Form 1120S.

7. Gross receipts passed through from other entities, and all other receipts that are included in gross income for Wisconsin franchise or income tax purposes.

(3) COMBINED GROUPS. The economic development surcharge applies to each member of a combined group separately. See s. Tax 2.82 for rules pertaining to the imposition and calculation of the economic development surcharge for combined group members.

Note: Section Tax 2.32 interprets subch. VII of ch. 77, Stats.

Note: Subchapter VII of ch. 77, Stats., was amended by 1999 Wis. Act 9 to replace the expired temporary recycling surcharge with a recycling surcharge, effective for taxable years beginning on or after January 1, 2000, and by 2011 Wis. Act 32 to change the recycling surcharge to the economic development surcharge effective July 1, 2011. This section applies to the economic development surcharge.

Wis. Admin. Code Department of Revenue Tax 2.32

Cr. Register, August, 2000, No. 536, eff. 9-1-00; CR 10-095: am. (2) (g) (intro.), cr. (3) Register November 2010 No. 659, eff. 12-1-10; CR 12-011: am. (title), (1), (2) (a) 1., (d), 1., 3. to 6., (e) 1., (g) 1., 2., (h) 1., (3) Register July 2012 No. 679, eff. 8-1-12; CR 14-005: r. (2) (e) to (h) Register August 2014 No. 704, eff. 9-1-14.

Amended by, CR 19-141: am. (2) (a) 1. to 6., (b) 1. to 8., (c) 1. to 6., (d) 1. to 6. Register September 2020 No. 777, eff. 10/1/2020

In the case of Wisconsin Department of Revenue vs. Romain A. Howick, 100 Wis. 2d 274 (1981), the Wisconsin supreme court held that for the purpose of determining a loss on a sale, the basis of property located outside Wisconsin acquired before the owner became a Wisconsin resident is the basis determined under the Internal Revenue Code. In this section the same principle is applied to gains realized on the disposition of such property. This principle was codified into s. 71.05(1) (m), Stats., by 1985 Wis. Act 261, effective for the earliest taxable year in respect to which additional assessments or refunds may be made. Section 71.05(1) (n) and (o), Stats., was also created by 1985 Wis. Act 261 to provide exceptions with respect to a principal residence effective for the same period of time. Section 71.05(l), (m), (n), and (o), Stats., was renumbered s. 71.05(12) (a), (b), and (c), Stats., by 1987 Wis. Act 312.

Note: Section 71.07(1), Stats., was amended by Chapter 39, Laws of 1975, effective with the 1975 taxable year. Prior to the 1975 taxable year, income or loss derived from real property or tangible personal property followed the situs of the property from which derived. Section 71.07(1), Stats., was renumbered ss. 71.04(1) (a) and 71.362(1), Stats., by 1987 Wis. Act 312.

Note: Section Tax 2.30 interprets ss. 71.05(12) (a), (b) and (c), (15), (16), (17) and (18) and 71.04(1) (a), Stats.)